With almost a million more households living on less than what they need since the downturn, a lot of ground has to made up to help on the cost of living, says Katie Schmuecker.
As the green shoots of economic recovery emerge, the question of whether we will witness a recovery that all can benefit from is gaining in prominence.
Government analysis published last night shows 90 per cent of people saw their wages rise faster than prices between April 2012 and 2013. Their analysis looks at individual pay, the tax allowance and the official rate of inflation. But it did not look at overall household income, including income from in-work benefits (like tax credits) or child benefit.
As JRF’s new report captures today, recent years have seen a general downshift in living standards resulting from stagnant wages, cuts to benefits and the increasing cost of essentials. Our research reveals who is feeling the squeeze on living standards most acutely.
Using what the public think is required for an acceptable standard of living (known as the Minimum Income Standard or MIS) as a benchmark, research by Centre for Research in Social Policy has analysed who is falling short of an acceptable living standard. It also looks at trends over time.
Among the 20 million households whose living standards can be calculated by MIS, the number falling short has increased by a fifth in three years - from 3.8 million households in 2008/9 to 4.7 million households in 2011/12 (the most recent data).
The sharpest deterioration in living standards has been felt by single people who live alone. In particular, the number of younger people that live alone (those aged under 35) and fall short of an adequate standard of living increased from 29% to 42% in three years. Shockingly, those with less than half what they need also shot up: from 9% to 25%. These people will be making daily choices about which essentials to go without.
A large number of families with children also live below MIS, and this group has also seen their risk of falling short of an acceptable standard of living increase from 31% to 35%. Their changing fortunes are illustrated starkly by considering what has happened to lone parents. In 2008/09, 65% of lone parents lacked an adequate income, a figure that fell steadily until it reached 60% by 2010/11 as successive governments offered extra support to families with children. However, all those gains have been lost: in 2011/12 the number of lone parents living below MIS leapt back to 67% as cuts to benefits and tax credits were implemented.
As the election approaches, the parties will jostle to make the best cost of living offer. And with 900,000 more households since the start of the recession living below what they need to make ends meet, there is significant ground to be made up. Reports like the one we have published today should act as a guide for who to prioritise as recovery takes hold.
Click here for more about a Minimum Income Standard.
